Outline of the causes and effects of inflation in the economy 财务英文毕业论文

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1、OutlineofthecausesandeffectsofinflationintheeconomyTABLEOFCONTENTSINTRODUCTION91.DEFINITIONOFINFLATION102.HISTORYOFINFLATION103.MODERNDAYMEANINGOFINFLATION104.CONSUMERPRICEINDEX115.INFLATIONRATE126.CAUSESOFINFLATION147.EFFECTSOFINFLATION158.CONTROLLINGINFLATION15CONCLUSION16REFERENCES20-28-INTROD

2、UCTIONThepurposeofthisprojectistoclearlydefineINFLATION,identifyitscausesandeffectsandthewaysofeffectivelycontrollingit.Thisassignmentisdesignedtoprovideclearunderstandingofwhatinflationis.Furthertheessaywilloutlinethecausesandeffectsofinflationintheeconomyasawholeandwillidentifymeasuresonhowtheg

3、overnmentcaninfluenceandeffectivecontrolinflationtotheadvantageofthestateeconomy.-28-1.DEFINITIONOFINFLATIONInEconomics,Inflationisariseinthegenerallevelofpricesofgoodsandservicesineconomyoveraperiodoftime.(MichaelBurdaandCharlesWyplosz(1997),Macroeconomics:AEuropeantext,2nded.,p.579(Glossary)2.H

4、ISTORYOFINFLATIONTheoriginofInflationdatesbacktothetimewhengoldwasusedasthepurchasingmediumintradinggoods.Itisatermwhichwasreferredtoaconditionofcurrency.Itwasoriginallyreferredtoasthedevaluationofthecurrency.Thebestexampletoshowthisdevaluationiswhenarulerorakingcollectsgoldfromhispeopleandsubseq

5、uentlymeltthesedownthenmixitwithothersemi-preciousmetalssuchassilver,copperorleadtoincreasethecoinsincirculationwithouttheneedtoincreasetheamountofgoldtoproducethem.Andwhentherulerorkingadoptsthispractice,thesupplyofcoinsincirculationwouldincreasebutwillultimatelydecreasethevalueofthecoin.Oncethe

6、valueofthecoindeclines,itwouldincreasethenumberofcoinsrequiredtoexchangeforgoodsorservices.ApplyingthebasicconceptoftheLawofSupplyandDemandinEconomics,thiswouldmeanthatasthevalueofacoindecreasesduetoageneroussupplyincirculation,thereisaproportionateincreaseinthenumberofcoinsrequiredinexchangeofgo

7、odsorservicesAndalthoughthiswillincreasethemoneysupply,thevalueofthecoinisdecreased.Whentherelativevalueofthecoindecrease,theconsumerswouldrequiremorecoinstopurchaseandwouldexperienceapriceincreasewiththedeclineoftheco